I am the newest of noobs and I would like to know how I can tell the fair market value of mobile homes in my area. I have found plenty of homes for sale but I am not sure how good of a deal any of them are because I have no idea what I can make on the resale. Therefore I am hesitant to make a bid on any home until I gain some understanding. Is there a website or book or anything that can help with this or should I just guestimate or ask around. I dont know where to start really so any info would be great, thanks.
This question and many, many more that will follow are all addressed in great detail in “Deals on Wheels” by Lonnie Scruggs. This is the book that got most of us started. It is for sale here for about $35 I believe.
Easy read and will pay for itself countless times over. It has for me.
Actually I have read “deals on wheels” and I am currently reading “making money with mobile homes” and they discourages using NADA books for price guides and encourages learning your market by asking around. Well, I have no experience in investing what so ever in anything let alone mobile homes or real estate so I dont know who to ask. So I figured I would start asking people who have been doing this for a while, i.e. this forum. So I am curious what specifically people do to learn the prices in their marketplace initially.
Go out and look at 30 mobile homes in your area. Take note of the year, size, number of bedrooms and condition.
Not only will you learn what the homes prices are, but you will gain experience looking at them. No matter what price they say just give them your card and say “If you think you can do better down the road give me a call” Most likely some people will call you back with lower prices.
The best way to learn is not in front of your computer.
Just get out and do it!
That is an excellent idea, thanks
Follow Briton’s advice (he’s a smart guy)
Be sure to keep notes and/or take photos of the homes you look at.
Then, call all those folks back in a month and ask them if they still have the home.
If they don’t, ask what it sold for, terms, how long on market, etc. You now have accurate comps.
If it didn’t sell . . . well . . maybe they’re a bit more motivated now and a deal can be made?
For What It’s Worth,
While it never hurts to look at 30 homes to get to know your market, I think from a Lonnie deal perspective the “fair market value” you find from such an experience is invalid.
You are selling affordable payments on a house. Remember how Lonnie teaches to compare the lot rent and house payment to a rental payment on a similar apartment.
If the apartment rents for $700 then we work the numbers to try and keep lot rent and payment less than $700.
When we start comparing retail numbers we are stepping outside the game. Retail asking prices are just that. Lonnie dealing is about buying wholesale based upon the payments you can sell them for. Lonnie is big in computing yield and that is based upon the payment stream you create from the capital you put down.
None of the Lonnie deals I bought were anywhere close to the retail asking price you see in the paper, on the signs in the windows etc.
We all have repeated and read time and time again that most of the homes we buy are not even advertised for sale. Most deals and the best deals came from the park manager or park owner, not from driving around looking at retail homes.
It is quite common for folks to step outside Lonnie’s model and most of us look back a year later and see exactly where we did and why things went wrong. After years of doing these deals you might fine tune it for your area a bit but stepping outside the wholesale/owner finance model into retail is a painful lesson in most cases. If you are going to mix models you lose the advantages of each model. Retailing in a hard to finance market is another business model entirely.
If you are doing Lonnie deals you are not selling for a set price and most of us and all of our buyers never know the final selling price of a Lonnie deal until we know how much the buyer can afford to put down and how much they can afford per month.
I completely agree with Tony and also Briton’s recommendation, but have another approach.
Run an ad. A fake ad in the paper that says "3 bed 2 full bath, jacuzzi tub, large bright eat in kitchen…something along those lines, and then gauge your response.
You should get a lot of calls. Tell the callers that unfortunately the unit sold, but that you are looking for other homes and ask exactly what they are looking for and what they can afford.
Writing down all of their responses should give you an outline or idea of what home to look for, and the benefit is that you have a list of people looking when you do buy one.
I think your biggest problem is the fear of making a mistake. Which is fine, everyone has the same fear when they start out. You are afraid you may pay 5,000.00 for a home and then realize you should have paid 2,000.00. That’s happened to most of us as well. The good thing with Lonnie deals is that there is a lot of room for error. Do as Tony said, and by backing into the price on the home, YOU are creating the value by financing, and YOU are essentially creating the market.
If you sell that home on terms for 6,000.00, you are still going to make money…not as much as if you had paid 2,000, but the checks should still come in. Lesson learned.
Ten yrs. from now when someone asked you what the best home you ever bought was, your response will probably be “My first one.” And why is that?
Because that first one is the one that killed the fear.
It is interesting to hear some vets talk about their advise on “how to start out fresh” on Lonnie deals.
In regards to Tony’s post. First of all I do not know who or what determines what we call “retail price” I imagine 15 years ago when homes had dealerships the retail price would be what the dealerships would sell the homes for. Around my area I would call retail price what a park (aka me) would sell a home for.
I do believe the “retail price” is an important thing to know. I do several Lonnie deals a year over half my buyers are interested in the price. If you do enough deals you will also get some cash buyers.
If you do not know what the home prices in your area are, then you will not know a good deal when it is in front of you. The only way to find this information out is to get off the couch and look at homes. That or trust what “someone” tells you.
I do not believe this steps outside of Lonnie’s model. In fact I remember one example in his book in which he tells the seller that the price is a good price(retail price?), but that’s not what he can pay for it. Then after purchasing the home, he turns around and sells the home for the original sellers asking price. (retail price?)
I suspect if a newbie gets out and look at enough homes he will eventually run across one that is just as nice as several comps, but 1/4 the price. Then the newbie will be able to smell the deal.
Or maybe after looking at several homes the newbie will find a buyer whom is motivated. After looking at several homes of unmotivated sellers he will be able to smell this motivation.
Everyone does things differently even within Lonnie’s general model. This comes down to personalities. Our personalities and the buyers personalities. There are buyers I probably loose because of how I say or do things. These same buyers Tony may have been able to sell a home to. They may have been attracted to how he markets and sells. Or I may say or do things that is unattractive to that type of person. (I have been known to ask several penetrating questions and scare people off)
I find that people in my area looking at mobile homes are not too interested in the apartment price comps. Most of my buyers want to own their own home. If they want to rent an apartment, they rent an apartment. (I do not prefer to rent homes but do occasionally pick off the best renters if I can smell that they are much above average candidates)
Tony, it may seem like I am trying to pick an argument with you. Trust me that is not the case. I enjoy talking strategy and I enjoy your posts. Its just that your post makes me feel like you think I recommended to step way out of Lonnie’s model with my advise, and I do not think that is the case. Lonnie’s general guidelines allow different marketing and negotiating.
“When we start comparing retail numbers we are stepping outside the game.” ----I just do not agree with this comment. Most of the time I sell my homes for “retail” and if I know the “retail” price, then I know a good deal when I see one. Example: 1/4 of retail would be a good deal for me.
I would like to know if you have a form you use when you are out looking at potential MH to purchase.D you take phone calls?
Would you consider a tag along, if I work with your schedule?